RV Business Revives, Spreading Economic Benefits Widely

People are returning to work at the Jayco recreational-vehicle plant in Middlebury, Ind., as camper sales increase. Unemployment in the country has dropped. Credit
John Konstantaras/Chicago News Cooperative

ELKHART, Ind. — Working so hard on the assembly line that his T-shirt was soaked, Clint Lehman hustled to build a camper trailer meant for someone else’s vacation. He could not have been happier.

“It’s great to be back,” said Mr. Lehman, a stocky 29-year-old who had been laid off for eight months last year. Called back to work by a surge in demand in the recreation-vehicle industry, he is earning $30 an hour for Jayco, one of the largest manufacturers in Elkhart County.

People are returning to work at some of the best manufacturing wages in the region, but maybe more important, the humming production lines indicate an increased demand for parts suppliers and affiliated businesses in the Chicago area. Unemployment in the county has dropped to 13.7 percent from a high of about 20 percent in March 2009.

During the 2008 presidential campaign, Elkhart, the nation’s center of recreation-vehicle production, became a symbol — “the poster child of the recession,” as a local catchphrase has it. In February 2009 President Obama used the city as a rallying stage to promote his economic stimulus plan.

“The recreation-vehicle industry is a leading economic indicator for the nation,” said Sid Johnson, the director of marketing for Jayco. “We lead the country into recessions, and we lead the country out of recessions.”

Across the street from the Jayco plant in nearby Middlebury, a new hotel is being built, a sign that good times are coming back.

While the upturn might signal growing consumer confidence, leaders in the recreation-vehicle industry acknowledge that much of the increase in production has been driven by the need to replace inventory that dealers were hesitant to restock during the financial crisis.

Officials in the region are unsure whether the new vehicles being produced and shipped to dealer lots will move quickly enough to encourage factories to hire even more workers.

“We’re at a critical juncture,” said Mike Yoder, a county commissioner in Elkhart County, which has a population of about 200,000. “Everything depends on whether these actually sell.”

Dealers say there is cause for optimism. At Camping World in Lincolnshire, just north of Chicago, the headquarters of the nation’s largest chain of recreation vehicles, sales have improved significantly for some models.

Marcus Lemonis, the chairman of Camping World, which owns 80 stores, said sales had increased 40 percent this year for the camping trailers that are towed behind a truck or car, models that cost an average of $28,000. Mr. Lemonis said sales were flat for luxury motor homes, the gleaming highway palaces that can cost $500,000 or more.

“The consumer has come back,” he said, “but in a more conservative way.”

The ripples of the rebound are reaching Chicago.

Kevin McNamara, an economist at Purdue University, said that while production of recreation vehicles is centered in Indiana, “some of the suppliers of the raw materials for those RVs are going to be coming out of the Chicago market.”

Zip Dee, an Elk Grove Village manufacturer of expensive powered awnings for recreation vehicles, has increased production as demand has risen from plants in Elkhart County and elsewhere, said Jim Webb, the company president.

Photo

Paul Thomas, talking to Walter Krumwiede, said times were so hard in Elkhart two years ago that many people moved away. Credit
John Konstantaras/Chicago News Cooperative

“It’s getting stronger every month,” said Mr. Webb. “I’m optimistic, but I’m not jumping on any bandwagon. It’s going to be a slow recovery.”

In Elkhart, people say they are grateful for an increase in any kind of buyer.

About one-quarter of the jobs in the county are tied to the recreation-vehicle industry, said Dorinda Heiden-Goss, the county’s president of economic development. “We’re seeing positive signs,” she said. “We’re just praying that it’s sustained.”

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Nationwide, production in the industry is about 93 percent higher than a year ago, said Kevin Broom, a spokesman for the Recreation Vehicle Industry Association.

Conditions in the industry had become disastrous. Nearly half of the 400,000 workers in the recreational-vehicle industry in the United States lost jobs during the recession, Mr. Broom said.

Paul Thomas, an 87-year-old businessman and the town historian in Elkhart, noted that two years ago many people in the county had already given up and moved away. United States Census Bureau figures show that Elkhart County saw a net out-migration of 2,366 people from 2008 to 2009, although a rising birth rate made up for the exodus and population figures remained relatively stable.

Plenty of houses stand empty, and many others are being foreclosed or sold at fire-sale prices.

But on Main Street in Elkhart, the talk over coffee in the Old Style Deli is more upbeat these days.

“It feels like things are turning around,” said Allen Knight, 59. “There for awhile, it seemed like another company was closing its doors every day. People wondered, ‘How long can this go on?’ It doesn’t feel so depressing now.”

But no one believes Elkhart will see a return to the high-flying days of the 1970s, when it seemed like any entrepreneur with a dream and some gumption, and a few good workers, could go into the recreation-vehicle business and become a millionaire.

The industry collapsed in 2008 when credit markets tightened significantly. Even when credit eased, banks looked skeptically at discretionary purchases of big-ticket items.

The problems with the economy, along with a period when gasoline prices topped $4 a gallon at the peak, left many dealers in ruins. Some 180 recreation-vehicle stores around the country closed last year, said Phil Ingrassia, a spokesman for the Recreation Vehicle Dealers Association.

For now, comparatively low gas prices of less than $3 a gallon are helping the industry. Winnebago Industries, a maker of motor homes based in Iowa, earlier this month posted its first quarterly profit in more than a year.

Jayco, which is privately held, expects shipments to dealers to increase by about 70 percent in 2010 compared with a year ago, Mr. Johnson said.

Despite signs of an improving market, manufacturers said they were being conservative, protecting themselves against getting stuck with a glut of inventory.

Mr. Yoder, the county commissioner, said many in the industry had been so badly hurt that they were reluctant to make brave predictions about success.

“When times are good, nobody ever thinks they’ll go bad again,” he said. “And when times are bad, nobody ever thinks they will ever get good again. We’re going through some of that psychology right now.”

The same kind of caution is evident among workers on the assembly line. Mr. Lehman does not pretend to be an economic expert, but he knows that $30-an-hour jobs are coveted. He knows about layoffs and financial pressure. He has a young family to support.

His shift starts at 5 a.m. He shows up early to pull on his tool belt, ready to sweat and grateful for the chance.

A version of this article appears in print on July 2, 2010, on Page A19A of the National edition with the headline: RV Business Revives, Spreading Economic Benefits Widely. Order Reprints|Today's Paper|Subscribe